Yesterday I played with tomorrow’s phones. Things like that happen as a futurist.
I went to see a company called Qualcomm, a name you may not know today but that will likely be as familiar as Intel in years to come. Qualcomm has been a key player in the mobile industry pretty much since its inception — certainly as far back as my direct experience goes (2000). Only now is it considering communicating more with the public, rather than with the Samsungs, and LGs of the world who rely on its technology.
The product I was looking at yesterday is the latest iteration of its mobile phone platform, the Snapdragon 800. In a single package this provides all of the major components you need to build a smartphone or tablet: networking, processing, video, and voice. Stick a screen, a camera, a case, a battery, ports and an aerial on it and you pretty much have a phone: everything else is software.
One thing that caught my attention yesterday was the chip’s ability to both capture and display 4K video. If you’re not familiar with 4K, it’s four times the resolution of HD. That means super-sharp, super-rich images with lots of depth too them, even without any 3D technology. 4K TVs are already on the market, albeit wallet-crushingly expensive.
The device can also capture and play back surround sound. Add amp and TV and you have a very high-end home cinema system, as was demonstrated with exclusive clips of Pacific Rim (prepared for the recent E3 show — yes, I was geeking out).
All very cool.
Stuff Drives Storage
Another meeting I had yesterday was with Richard Lee, president and CEO of QNAP Systems, a company I have written about here before. QNAP makes network attached storage (NAS) devices. These are small, efficient computers with lots of hard disk capacity designed to be a repository for all your digital goodies: music, photos, videos, documents etc.
Richard is delighted that the next generation of phones will have better cameras. Why? Because more megapixels means more megabytes are required to store your digital creations. The incredible amount of content that we are consumers are creating is what is driving the NAS market, predicted to grow at over 20% a year.
Richard pointed out though that it is not just the ability to capture content that is driving the desire for storage. It is the ability to share it; the availability of bandwidth needed to stream new photos and videos back to a central storage hub, access them across a variety of devices and share them with friends and family. We now have cameras with us all the time, and these cameras can — and do — instantly stream the images we capture off to our personal clouds.
And here is where it gets tricky…
Every time a new generation of mobile network comes along, everyone gets very excited about the speed of the connection between the phone and the mast. 2.5G, 3G, 4G — the conversation is always the same. Likewise with the advent of new home broadband services: you always hear about how many megabits per second your cable or DSL line will deliver from the exchange to your home.
What you never hear about is the link between the exchange and the rest of the world — what is known as ‘backhaul’. This is where it all starts to fall down.
In February this year, Tellabs — an old client of mine — sponsored some research that identified a $9.2bninvestment gap in backhaul networks. Based on a five to six times increase in the volume of data carried over mobile networks, at current investment levels, operators will be 16 petabytes short of capacity.
That’s quite a lot. Despite Tellabs clear interest in there being an investment gap (the company provides — surprise surprise — backhaul network gear), I don’t have trouble believing these figures. If anything they feel intuitively a little conservative: we know that there are bottlenecks in the UK’s mobile networks today, and data consumption is increasing incredibly fast.
Crunch, Crunch, Crunch
When demand for data outstrips supply capacity like this it has become known in the telecoms industry as a capacity crunch. Backhaul looks likely to be the latest in a series of crunches that have happened at different points throughout the communications networks over the years. There will be more: there are already rumours about a coming crunch in fixed-line (i.e. your home and business broadband) networks in the near future.
It’s not surprising that networks don’t scale evenly to meet demand. Nor that there’s sometimes a lag between demand and the supply to meet it. This is the nature of the market, particularly in an industry where demand is scaling so rapidly.
The alternative is to build based on forecast capacity. But we’ve been through that before too: it happened across the world during the dotcom boom. One client of mine bought and built itself a global network on the basis of forecasts of demand for internet services. At its height in 2000 the company was valued at $37billion. By the end of the following year it had been through Chapter 11, a form of voluntary bankruptcy, and acquired by Cable & Wireless for just $800m.
The company was called Exodus Communications. No-one wants to risk being the next Exodus.